FOREX-Dollar dips despite U.S. tariff fears as Brexit hopes lift pound

By Kitco News / September 06, 2018 / www.kitco.com / Article Link


* Dollar gains curbed as pound buoyed by Brexit hopes
* Wobbly emerging currencies support safe-haven dollar
* Swedish crown slumps after central bank meeting
* Graphic: World FX rates in 2018 (Adds detail, updates prices)


By Tom Finn


LONDON, Sept 6 (Reuters) - The dollar edged down on Thursdayafter a bounce in European currencies but investors saidconcerns about U.S. President Donald Trump imposing furthertariffs on Chinese imports could lift the greenback.


Trump could impose levies on $200 billion more of Chineseimports on Thursday when a public comment period on the newtariffs ends. That would represent a significant ramping up of the tradewar between the world's two largest economies and lift thedollar which has become a principal haven for investors seekingshelter from the conflict.


The greenback on Thursday, however, edged down 0.1 percentagainst a basket of major currencies to 95.121. Traders said that was because of gains made by sterlingafter Bloomberg reported on Wednesday that Germany would accepta less detailed agreement on Britain's future ties with the EUto get a Brexit deal done. Germany denied that its position on Brexit had changedthough sterling still traded up 0.2 percent against the dollarat $1.2925."The dollar continues to face residual pressure from thebuoyant pound amid the latest speculation over Brexit. How longthis lift could last remains to be seen, but it is prompting buybacks of other European currencies like the euro and Swiss francfor now," said Takuya Kanda, general manager at Gaitame.comResearch.


SWEDISH CROWN PRESSURED


Elsewhere, the Swedish crown sank 0.7 percent versus theeuro after the Swedish central bank kept rates unchanged andclosed the door for a rate hike in October. The Swedish currency fell last week to a nine-year lowagainst the euro on concern about an approaching election andgrowing investor conviction that interest rates may not riseuntil well into 2019. The crown has weakened more than any other developed-worldcurrency this year, falling 12 percent against the dollar. TheSwedish central bank is expected to be among the last to endstimulus policies dating from the 2008 financial crisis.


"The krona may struggle to rally much even with the Riksbankcontinuing to indicate a rate hike is coming later this year,"said Kit Juckes, global head of FX strategy at Societe Generale.


"There are buyers of the currency ahead of this weekend'selection on the grounds that the vote won't change theunderlying support of a near 4 percent current account surplus... but the global backdrop is definitely pulling the otherway," he added.


In contrast to the Riksbank and other European centralbanks, the United States Federal Reserve has been steadilyraising borrowing costs since late 2015, lending support to thedollar.


The greenback's more than 6 percent rise against its rivalsover the past six months has hit emerging market currencieshard.


An index of emerging market currencies istrading at more than one-year lows amid fears those currencieswould be hit by the global trade conflict as it negativelyaffects their export-oriented economies.


Argentina's peso, which has lost more than 50 percent of itsvalue this year, saw a rare pause in losses overnight.


Helping to restore some investor confidence, ArgentineEconomy Minister Nicolas Dujovne said on Tuesday he believed adeal to release early disbursements from a $50 billion standbyloan agreement with the IMF could be put to its board by the endof the month. The Argentine peso closed up more than 1 percentat 38.52 per dollar on Wednesday.


Elsewhere, the Australian dollar was flat at $0.7196 .As with the previous day, when strong gross domestic productdata did not provide much of a lift, Thursday's economicindicators were unable to prop up the Aussie.


(Additional reporting by Shinichi Saoshiro in Tokyo; Editing byJanet Lawrence)

tom.finn.reuters.com@reuters.net)) Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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